Prudential executive talks business ethics

Aristide Economopoulos/The Star-LedgerMark Grier, vice chairman of Prudential Financial, is taking part in the launch of the Rutgers Business School's Institute for Ethical Leadership.

Insurer unites with Rutgers to investigate the role of principles, standards in the corporate world

In the eyes of many Americans, business executives have fallen from grace.

Some of them, it seems, could really use a brush-up course in ethics.

In an effort to provide that sort of training to leaders in business, government and the nonprofit world, Rutgers University is launching the Institute for Ethical Leadership. Prudential, the Newark-based insurer and financial services company, pledged $2 million toward the creation of the center last year.

As Rutgers prepares to launch the institute later this month, we spoke to Mark Grier, Prudential's vice chairman, about the ethical challenges facing executives and why moral principles -- may be taken for granted by the nations leading business schools -- are in need of some reinforcing.

Q: What is your view on the state of ethics in Corporate America?

A: There's probably plenty of evidence to show more education on ethical behavior is needed. There have been ethical lapses and there have been companies that have gotten into a lot of trouble because they haven't followed ethical standards. In some ways, it couldn't be a more interesting time to raise the issue of ethics. When you hear the word ethics, the tendency is that it's black and white or good and bad. It gets reduced to things that are straightforward and simple. But executives today face a whole lot of issues that can't be reduced to a spreadsheet, that involve conflicting interests and coming at questions from a different perspective. When I say coming at questions from a different perspective, I mean coming at something from an ethical way of thinking. Executives can be taught or encouraged to do more than analyze, to step out from behind the financial analytical lens and come at an issue from the perspective of right and wrong and an appropriate balance of values.

Q: What qualities make a strong, ethical leader?

A: The cliche would be having a strong moral compass, which would mean you would know right from wrong. It would be an individual who has the ability to look past the numbers and the analysis. Sometimes the issues are more important than what the numbers are telling you. Not every leader has the ability to take that perspective though. It's really the ability to think the right way about a question.

Q: What are some of the biggest ethical challenges facing today's business executives?

A: Let me put it into three categories: The first would be the doing business day-to-day category, which includes recognizing the long-term interest of customers, doing the right thing, making sure customers are getting a fair deal, that we're careful about what were asking our sales force to do. In financial services -- I'm speaking broadly not about Prudential specifically -- it's even more important because of the complexity and the sensitivity of the outcomes. The second one -- it's a hot subject today -- is managing and compensating employees. There are value judgements and ethical issues involved. How do you balance the company's results and retain good people when there are things influencing the decision like the economy or the stock market that are out of the control of employees. There's a need to understand what was controllable and what wasn't and how things should be shared and what's fair and what's right. It's not just about the numbers. The third category is the more esoteric area of being a public company. Every company faces dilemmas about what to disclose and when to disclose it. SEC (Securities and Exchange Commission) filings are getting thicker and thicker, getting more technical with more legal requirements. We face constant questions about what we should and shouldn't say, how to sort out being legally correct and meeting the standards of the SEC without putting ourselves at risk.

Q: Maybe it's idealistic, but shouldn't the people who reach the corner offices have strong ethics. Why is there even a need for special education moral principles and values?

A: I happen to come from a long line of Presbyterian ministers, so I may have more of it. The problems a modern executive faces are enormously complex. Things don't always tilt easily to black and white. Just like we teach people how to do the financial analysis and how to write a paper, teaching and coaching them how to apply the concepts of ethical leadership is a useful way for us to use resources.

Q: What sort of research is the institute likely to do?

A: It's heavily case driven, looking at examples where key ethical decisions were made or not made which may have resulted in some useful outcome.

Q: If you look around the business world, is there someone who serves as a good model of ethical leadership?

A: Prudential made the commitment to the institute when Art Ryan was still our chief executive officer. I worked with Art for a long, long time. When we had a problem, he would always ask, "What's the right thing to do?" It wasn't necessarily the easiest thing, the cheapest thing or the one that would save face. Our day-to-day problem-solving resulted from that question: What's the right thing to do?